The interest-free loan that benefit claimants can get to pay for essentials

Kieran Isgin & Kieran Isgin & Niamh Dann

3 July 2024 at 10:30 am·2-min read

The escalating cost of living crisis is exerting significant pressure on personal finances. For those finding it difficult to make ends meet, a Budgeting Loan could provide some relief by helping to cover essential costs such as advance rent, clothing, and maternity expenses, reports the Manchester Evening News.

This loan, provided by the Department for Work and Pensions (DWP), is only accessible to benefit claimants who have been claiming for the past six months.

However, only certain benefits qualify for the loan, including the following:

Income Support
Income-based Jobseeker’s Allowance
Income-related Employment and Support Allowance
Pension Credit

Those currently claiming Universal Credit are not eligible for the loan. However, if you transitioned from Universal Credit to Pension Credit, the time spent claiming the latter will count towards the six-month requirement.

Your eligibility may also be affected if you are already repaying an existing Budgeting Loan or Crisis Loan.

How much you could get

It's crucial to remember that any money received from a Budgeting Loan must be repaid and should therefore be considered a temporary solution. According to GOV.UK, the minimum amount you can claim with a Budgeting Loan is £100.

You could potentially receive up to £812 if you or your partner claim Child Benefit. If you're single and don't claim Child Benefit, the maximum you could get would be £348, which increases to £464 if you have a partner.

The sum you receive will also hinge on your capacity to repay the loan and the amount in your savings. A key advantage of a Budgeting Loan is its interest-free nature, meaning you only need to repay the borrowed amount.

Repayments are automatically deducted from your benefit, with the repayment amount determined by your income and affordability. The government recommends that repayments should be completed within two years of the loan's issuance.

You can apply for a Budgeting Loan on GOV.UK here.

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How much you could get

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